Can You Retire on $500,000? What the Numbers Actually Show
Retirement may feel like a distant goal, but for many Americans, the real question is becoming urgent: is $500,000 actually enough to stop working?
Financial planners often point to the “4% rule,” a guideline popularized by financial research from firms like Vanguard and Fidelity. The idea suggests that retirees can withdraw roughly 4% of their savings annually to help their money last about 30 years.
Using that rule, $500,000 would generate about $20,000 per year before taxes.
That number raises an immediate follow-up question: Can you live comfortably on $20,000 a year, even with Social Security?
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What Social Security Adds
According to the Social Security Administration, the average monthly retirement benefit in 2026 is roughly $1,900 per month, or about $22,800 annually.
Combined with a $20,000 annual withdrawal from savings, that would total around $42,800 per year.
For some retirees in lower-cost regions, that may be manageable. But in higher-cost states, especially where housing, property taxes, and healthcare expenses are elevated, it may fall short.
(Source: Social Security Administration benefit data; Fidelity retirement planning guidance.)
The Biggest Risk: Healthcare and Longevity
Healthcare costs remain one of the largest unknowns in retirement planning. Fidelity estimates that the average retired couple may need hundreds of thousands of dollars in lifetime healthcare expenses, even with Medicare coverage.
Longevity also changes the math. Living into your late 80s or 90s means savings must stretch longer than many people anticipate.
So Is $500,000 Enough?
The answer depends heavily on:
- Where you live
- Whether your home is paid off
- Healthcare costs
- Lifestyle expectations
- Other income sources
For some households, it may be workable. For others, it may require continued part-time work or delayed retirement.
What’s clear is that $500,000 does not stretch as far as it once did, especially in an era of higher living costs.
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